The funding landscape of Indian startups had been dominated by the fintech and e-commerce segments in recent years. Digital payments saw the largest boost in the country. Furthermore, online retail made it big with Walmart’s acquisition of Flipkart, the world’s biggest e-commerce deal, impacting not just the segment, but also its competitors and customers. Other companies in the spotlight were OYO, Zomato, Swiggy, and Udaan. Edtech was the most funded segment in 2020, with BYJU’s standing out as one of the most valued edtech companies worldwide. Its co-founder, Divya Gokulnath, also topped the list of India’s female entrepreneurs.
Startups were not only diversifying the economy, but also the landscape of how they were being funded. Between 2014 and 2020, Chinese investors – such as Alibaba, Tencent, T.R. Capital, or Hillhouse Capital – helped some of the most prominent Indian startups to grow. After border disputes in summer 2020, the Indian government imposed new regulations on startup funding and sanctioned Chinese apps in India. In 2020, U.S.-based Tiger Global Management and Japanese SoftBank Group topped the list of venture capital investors in India. The surge in private equity and venture capital funding for new enterprises had been immense within the last decade. The reasons for this include an increasing number of foreign investors and a startup-friendly political environment in the government’s policies. Besides the big investors, angel investment grew in popularity and enabled funding in the early stages for various startups.
Despite an overall stable funding environment for startups during the coronavirus (COVID-19) pandemic, some startups and small & medium enterprises (SME) stumbled over cashflow issues. The government aimed at countering those developments with large-scale funding programs. Whether this will be successful or not will be seen in the overall assessment of the government’s crisis management.